Nifty likely to move up sharply if it is able to sustain above 7,930
Indian market opened Tuesday higher than previous day’s closing but could not sustain itself in the green and soon plunged into the red. Immediately the benchmarks made a struggle to revive but it was pulled further lower. In Monday’s closing report, we had mentioned that NSE’s CNX Nifty will move higher as long as it closes above 7,895.
S&P BSE Sensex opened at 26,537 while Nifty opened at 7,923. Sensex moved in the range of 26,212 and 26,551 while Nifty moved between 7,825 and 7,928. Sensex closed at 26,349 (down 35 points or 0.13%) while Nifty closed at 7,864 (down 20 points or 0.26%). NSE recorded a volume of 82.77 crore shares. India VIX rose 0.64% to close at 14.5925.
Among the other indices on the NSE, the top five gainers were PSU Bank (1.42%), Bank Nifty (0.47%), Dividend Opportunities (0.33%), Nifty Junior (0.32%) and Infra (0.28%), while the top five losers were Realty (9.02%), IT (0.76%), Auto (0.39%), FMCG (0.38%) and Commodities (0.30%).
Of the 50 stocks on the Nifty, 23 ended in the green. The top five gainers were Bhel (3.87%), Axis Bank (2.80%), Bajaj Auto (2.67%), IndusInd Bank (2.50%) and State Bank of India (2.02%). The top five losers were DLF (27.98%), BPCL (2.34%), Cairn (1.95%), HCL Technologies (1.42%) and Tata Motors (1.41%).
Of the 1,577 companies on the NSE, 649 companies closed in the green, 876 companies closed in the red while 52 companies closed flat.
Data released by the union government after trading hours on Monday showed the annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 6.46% in September 2014, from 7.73% in August 2014. The rate of inflation based on the combined consumer food price indices (CFPI) for urban and rural India eased to 7.67% in September 2014, from 9.35% in August 2014. Core CPI inflation, which excludes food and energy prices, eased to 5.9% in September 2014, from 6.82% in August 2014.
After market hour on Monday, Reliance Industries came out with its September 2014 quarter result. The consolidated results for the September 2014 quarter showed net profit of Rs5,972 crore as compared to Rs5,873 crore for the quarter ended September 2013. Net sales decreased from Rs115,491 crore for the quarter ended September 2013 to Rs109,797 crore for the quarter ended September 2014. On the other hand, standalone results for the quarter showed net profit of Rs5,742 crore for the quarter ended September 2014 as compared to Rs5,490 crore for the quarter ended September 2013.
Net sales decreased from Rs103,758 crore for the quarter ended September 2013 to Rs96,486 crore same quarter a year ago.
The Wholesale Price Index (WPI) data was released on Tuesday. The continuing decline in food prices, including vegetables, pulled down the September wholesale price inflation to a five-year low of 2.38%. The WPI based inflation was at 3.74% in August and 7.05% in September 2013.As per data released by the government on Tuesday, the food inflation fell to a nearly two-and-half year low of 3.52%. Food inflation is on the decline since May.
Speaking at the state banquet hosted by King Harald V and Queen Sonja at the Royal Palace, Indian President Pranab Mukherjee, said, “We welcome foreign direct investments in our railways, roads and ports, power and communications sectors. We invite Norwegian companies to join Indian counterparts in the 'Make in India' initiative of the new government and we are presently simplifying the procedures to facilitate their participation in India's growth story.”
Den Networks (20%) was the top gainer in ‘A’ group on the BSE. The stock which crashed by nearly 15% in the three days following the news of its CEO resigning on 29 September 2014, has gone up by 46% since then.
DLF (28.46%) was the top loser in ‘A’ group on the BSE. The stock hit its 52-week low today. The company was in the news for Sebi barring DLF and six of its top executives including chairman KP Singh from accessing stock markets for a period of three years.
Ahead of September 2014 quarter results to be given by Bajaj Auto, the stock was among top three gainers (2.50%) in the Sensex 30 pack. Bank of America-Merrill Lynch has upgraded the stock to "buy" from "underperform".
Tata Motors (1.64%) was the top loser in the Sensex 30 stock. It has received another order to supply 928 Tata Marcopolo built buses to the State Transport Authorities in South India. The order comprises 487 units bagged from Karnataka (Karnataka State Road Transport Corporation), 40 units from Puducherry (Pondicherry Road Transport Corporation), 97 from Kerala (Kerala State Road Transport Corporation) and 304 from North East Karnataka region (North Eastern Karnataka Road Transport Corporation).
These are part of the 2,700 orders bagged by Tata Motors, for Tata 'URBAN' buses under JnNURM - II scheme.
US indices closed in the red on Monday. US Federal Reserve Bank of Chicago President Charles Evans reportedly said on Monday the "biggest risk" to the economy right now is that the central bank would raise interest rates sooner than it should.
Except for Jakarta Composite (0.19%), Seoul Composite (0.11%) and Taiwan Weighted (0.65%) all the other trading Asian indices closed in the red. Nikkei 225 (2.38%) was the top loser.
China's central bank cut the interest rate it pays lenders for 14-day repurchase agreements for the second time in a month.
European indices were trading in the red while US Futures were trading marginally in the green.
French consumer prices fell further than expected in September, adding to concerns over persistently low inflation in the eurozone. Consumer prices in the eurozone's second-largest economy fell 0.4% in September from August and were 0.3% higher than in September last year.
SEBI said disclosures were admittedly made by the Glaxo group with an aggregate delay of 60 days
Market regulator Securities and Exchange Board of India (SEBI), on Tuesday slapped a fine of Rs25 lakh on Glaxo Group Ltd, a promoter entity of drug maker Glaxo SmithKline Pharmaceuticals, for failing to make timely disclosures about its aggregate shareholding to the company and the stock exchanges.
In its order, SEBI said, Glaxo Group neglected the duty of making timely disclosures to the stock exchanges the BSE and the NSE, on various occasions.
SEBI came across the violations by Glaxo Group while examining the draft letter of offer filed by Glaxo SmithKline Pharmaceuticals along with UK-based Glaxo SmithKline Plc and Glaxo Group, to acquire 24.33% stake in the India-listed group entity.
As on quarter ending September 2014, Glaxo Group held 35.99% stake in Glaxo SmithKline Pharmaceuticals as the largest promoter shareholder.
Penalties, totalling to Rs25 lakh which needs to be paid within 45 days, have been imposed by the capital market regulator for violating various provisions of SEBI's Takeover Regulations.
Under these norms, a promoter of a listed company has to, disclose, together with persons acting in concert with him, their aggregate shareholding and voting rights as on 31st March, in the firm, within a prescribed time period, to the relevant stock exchanges as well as the company.
SEBI found that Glaxo Group, as a promoter group entity, was under an obligation to disclose the aggregate shareholdings to the BSE and NSE as well as to Glaxo SmithKline Pharmaceuticals India for the year 2007.
However, the said disclosures were admittedly made by the entity with an aggregate delay of 60 days.
The market watchdog also noted that Glaxo Group was required to disclose its shareholdings for the year 2012 and 2013, but made the same with an aggregate delay of 158 days.
SEBI’s three year ban on DLF, its promoters and some of its employees, raises the question about whether DLF should remain in NSE's CNX Nifty index
A 3-year ban on DLF's and its promoters by the Securities and Exchange Board of India (SEBI) caused the shares to tumble 30%, which was also its 52-week low on the National Stock Exchange (NSE). SEBI barred DLF and its directors including promoter KP Singh for failure to make appropriate disclosures in its prospectus at the time of its second IPO in 2007. The order raises serious questions on the future of the real estate company, especially whether it should remain a constituent of NSE's benchmark CNX Nifty. SEBI's long-winded investigation, which concluded only after there is a new government in Delhi is only hurting DLF investors, who are hit by collateral damage when the market regulator chose to punish the company for actions of its management and promoters.
DLF cannot raise money from the capital markets or buy and sell shares. This could seriously affect the company's future business growth at a time when the economic is recovering. This means that shareholders will pay the price for what SEBI thinks is dubious action by the promoters, in failing to make proper disclosures. The SEBI order also does not mention the investment bankers and lead manager of the initial public offering (IPO), who sign off on the prospectus and are responsible for the accuracy of facts in the draft Red Herring Prospectus (DRHP). All this is especially strange because DLF was always a controversial company and had angered shareholders by delisting once in 2003, then seeking to re-listing again in 2007, that too by ditching nearly 1,800 investors who had stuck to their shareholding.
The construction major in its DRHP, filed for a public issue in May 2006, had mentioned that Sudipti Estates Pvt Ltd was its associate company. The DRHP however, had been withdrawn and a fresh prospectus was filed in January 2007, in which Sudipti was not mentioned as an associate.
According to Institutional Investor Advisory Services India Ltd (IiAS), SEBI’s order sends out a strong message to promoters and management to take the disclosure requirements under the law seriously. "This is another strong message for corporate India to better its governance standards. This order also showcases the impact that a single investor or counterparty (since the entire investigation emanated from a business transaction) can have," the advisory firm said.
IiAS also questioned whether DLF should remain a front-line index stock? It said, "Being part of the CNX Nifty, DLF attracts several equity retail and institutional shareholders. Index funds will also be required to hold the stock in the almost the same measure as its weight in the index. But, with the recent SEBI order, markets must question whether it should remain a constituent of a principal index."
This is not the first time DLF faces a controversy or regulatory action. Recently, the Competition Commission of India (CCI) penalised the company with a fine of Rs630 crore. Even earlier, it faced shareholder ire after it delisted from the exchanges in 2003, and soon followed this with a bonus.
The current action of SEBI stems from a complaint filed by a Delhi-based businessman. In 2007, Kimsuk Krishna Sinha, had alleged that DLF and its directors and agents had lured and compelled him to transfer certain plots of land and did not fulfil the promise of developing the land and providing him higher returns. Other than KP Singh, who is the executive chairman of DLF, SEBI barred Rajiv Singh, vice chairman and son of KP Singh, TC Goyal, managing director, Pia Singh, whole time director and younger daughter of the DLF chief, Kameshwar Swarup, executive director for legal, GS Talwar, director and son-in-law of KP Singh and Ramesh Sanka, chief financial officer (CFO) of DLF.
DLF closed Tuesday 28% down at Rs105.8 on the NSE, while the 50-share benchmark ended the day marginally down at 7,865.